To many entrepreneurs focused on keeping costs down and milking
every cash-flow dollar, corporate giving programs sound like a
luxury they just can't afford. But in today's competitive
environment, corporate charitable programs and partnerships may be
the cheapest strategic competitive edge you can get--not to mention
the satisfaction they can bring.

According to the "2004 Cone Corporate Citizenship
Study" conducted by Cone Inc., a Boston-based strategic
marketing firm, 8 in 10 Americans say corporate support of causes
helps earn their loyalty to a business; that represents a 21
percent increase since 1997. The study further found that 90
percent of respondents would consider switching to another
company's products or services because of illegal or unethical
corporate behavior. And younger Americans, ages 18 to 25, were
significantly more likely to consider a company's corporate
citizenship when deciding whether to buy from, or work for, that
company.

While most of the talk surrounding brand loyalty tends to focus
on bigger companies, the underlying trend is equally significant,
if not more so, for small businesses, says Mary Fehlig, president
of the Fehlig
Group, a Washington, DC, consulting firm that helps companies
implement socially responsible business practices. Says Felig,
"If 8 out of 10 people say they'll switch vendors based on
a company's reputation, that's as true for the local corner
store as it is for Coke."

The Goodwill Advantage
When executed strategically, doing the right thing can directly
boost a company's bottom line. Eight years ago, Steve Cohen,
third-generation owner of Jason's Music Center in Pasadena, Maryland,
saw that local public schools were short on funding for their music
programs and could ill afford the new instruments their students
needed. Cohen struck up a deal to lend the schools new pianos, free
of charge, for one year, and then replace them at the end of that
time. In return, the schools hold a well-advertised liquidation
sale, where the used pianos are sold at a discount. Jason's
also receives free advertising in all the schools' music
programs and gets the added benefit of the press the music program
garners.

"In that first year, we did about $150,000 worth of
business that was directly attributable to the program," says
Cohen. His program is now operating in six different counties, and
Cohen estimates the company is pulling in an additional $1 million
annually thanks to the program. "Plus, we've cut our
advertising budget in half," he adds, noting that new
customers routinely claim they've chosen to buy from
Jason's because of Cohen's support of the public
schools.

Business philanthropy can also translate into employee
satisfaction and better recruitment and retention, says Chris
Patterson, president and COO of Austin Grill, a
seven-restaurant chain in the Washington, DC, area. Austin Grill
has a program called First Mondays, which allows the
restaurant's general manager, with help from employees, to
select a local charity to which they donate one-third of sales from
the first Monday of each month. In addition to boosting employee
morale and giving the company a tax break on the portion it
donates, says Patterson, "It gives credibility to the brand.
We get a lot of repeat business just because we're out there
trying to be good corporate citizens."

The key to the goodwill advantage, says Fehlig, is finding
strategic ways to donate time, money or product so that the program
is enhancing the business rather than depleting it. If, for
example, you're trying to launch a new product or service,
donating it to a local charity can give you publicity and the
opportunity to do a bit of market testing, she says. "You
really need to think of it as an investment in the business,"
says Fehlig.

That investment can pay off for smaller companies, which have a
hard time competing on price. Stephen Jordan, executive director of
the U.S.
Chamber of Commerce's Center for Corporate Citizenship,
notes that companies short on cash or product can achieve similar
gains through volunteerism. And it's a natural fit. "The
community is their customers," he says, "Being good
neighbors is part of their [survival]."